Cadbury announces conditional sale of Schweppes Australia

24 December, 2008
Cadbury has announced the conditional sale of Schweppes Australia to Asahi Breweries.

Cadbury has announced the conditional sale of Schweppes Australia to Asahi Breweries. 

The company has entered into a conditional agreement with Asahi for a total consideration in cash of approximately GBP550m* (AUD1,185m). The decision to sell the business was announced in the trading update on 16 December 2008 and follows the completion of a strategic review announced in July 2008. 

The agreement with Asahi is subject to normal regulatory and other closing conditions, including Foreign Investment Review Board approval.  There is no financing condition.  In addition, the agreement is subject to a right of negotiation granted to The Coca-Cola Company (TCCC) in 1999.  Under this provision, TCCC has the right until March 2009 to negotiate with Cadbury regarding a potential acquisition of the Schweppes Australia business.  If TCCC makes an offer during this period, Cadbury will carefully consider such offer, including the price and likelihood of receiving necessary regulatory and other consents. 

If Cadbury and TCCC do not enter into an agreement with respect to Schweppes Australia, then Cadbury will enter into a binding sale and purchase agreement with Asahi. Cadbury expects that all other pre-conditions to closing will have been completed by 30 April 2009. 

Todd Stitzer, CEO of Cadbury, said: “The successful sale of Schweppes Australia will complete Cadbury’s divestment of its beverage operations. As a result, Cadbury will focus solely on growing its Chocolate, Gum and Candy portfolio in line with the Vision Into Action strategy, announced in June 2007.”  

The net cash proceeds of the disposal after tax and other costs associated with the separation of the business will be earmarked towards repaying the Euro600m bond that matures in June 2009. The Group has no other substantial bond maturities until 2013. 

Schweppes Australia is the second largest non-alcoholic ready to drink beverages business in Australia and its portfolio consists of both owned and franchised brands, including Schweppes and Pepsi.  It has around 1,500 employees.   

As a result of this agreement, Schweppes Australia will be treated as a discontinued business in the presentation of results for 2008.  The disposal is not expected to have a material impact on the earnings per share of Cadbury. 

UBS acted as sole financial advisor to Cadbury in relation to this transaction.

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